India's monthly inflation on the basis of the Wholesale Price Index (WPI) dipped deeper into negative ground to a two-year low of -0.58% in July 2025 from the corresponding period last year.
The government released the data on Thursday which said that the decline was largely due to decreasing prices of food items as well as fuels like petrol, diesel, and natural gas.
July WPI was also below June's -0.13%, following a trend of softening from March. The index had fallen to a 14-month low of 0.39% in May. Food items fell 2.15% and fuel prices decreased 2.43% from the same period last year, helping to achieve the negative inflation.
The decline in WPI inflation is set to ease retail inflation further as cheaper wholesale prices are transferred to the consumers, and falling fuel prices lower transport costs.
In the meantime, India's retail inflation measured by the Consumer Price Index (CPI) retreated to 1.55% in July from a year earlier, the lowest year-on-year retail inflation since June 2017, the Ministry of Statistics said. That was also 55 basis points less than June's 2.1%, the lowest since January 2019.
Food inflation for July went into the negative at -1.76% due to softer prices of pulses, vegetables, cereals, eggs, and sugar. Other reasons were lower costs in transport, communication, education, and a reduction in housing inflation.
The Reserve Bank of India (RBI) has forecast CPI inflation of 3.1% for 2025-26, attributing it to a normal monsoon and strong kharif sowing expected to maintain food prices stable. RBI Governor Sanjay Malhotra said, "The inflation outlook for 2025-26 turned more benign than anticipated in June. Big positive base effects along with robust advance of the southwest monsoon, good kharif sowing, satisfactory level of reservoirs and comfortable foodgrains buffer stocks have all gone to soften moderation.
However, CPI inflation is expected to rise above 4% by Q4 of 2025-26 due to unfavourable base effects and demand-side pressures from policy measures. Core inflation is projected to remain moderately above 4% during the year, assuming no major adverse shocks to input costs.
